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Manitowoc (MTW) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

The Manitowoc Company Inc. MTW is scheduled to release fourth-quarter fiscal 2018 results on Feb 7, after the closing bell.


In the last reported quarter, the company’s adjusted earnings per share slumped 45% year over year while revenues improved 13%. The top line came in line with the Zacks Consensus Estimate while the bottom-line figure beat the Zacks Consensus Estimate. The company has surpassed the Zacks Consensus Estimate in three of the four trailing quarters. The company has an average positive surprise of 21.4%.


Let’s see how things are shaping up prior to this announcement.


The Manitowoc Company, Inc. Price and EPS Surprise



The Manitowoc Company, Inc. Price and EPS Surprise

The Manitowoc Company, Inc. price-eps-surprise | The Manitowoc Company, Inc. Quote

Earnings Whispers

Our proven model shows that Manitowoc is likely to beat on earnings this quarter, courtesy of a perfect combination of the following two key ingredients:


Earnings ESP: Manitowoc has an Earnings ESP of +44.40%, representing the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. While the Most Accurate Estimate is at 7 cents, the Zacks Consensus Estimate is pegged lower at 5 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.


Zacks Rank: Manitowoc carries a Zacks Rank #3 (Hold). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 alongside a positive ESP have significantly higher chances of beating estimates. Thus, the above combination raises the odds of a likely earnings surprise for this stock.


Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.


Factors at Play


The general crane market is displaying signs of improvement as evident from the recent improvement in order activity. Manitowoc’s orders were pegged at $458 million in the third quarter, up 13% year over year. The increase in orders can be attributed to new products and favorable market conditions. Further, backlog at the end of the third quarter of 2018 came in at $700 million, up 50% from the prior-year quarter, which bodes well for fourth-quarter performance.


In Americas, demand is being led by the commercial construction and energy end markets. The North American oil and gas environment continues to improve with investment in upstream well completions continuing to drive crane utilization and replacement demand. In Asia Pacific, growth is being driven by India, Australia, and China. The company also noted overall stable demand in Europe, with moderating demand in Western Europe.


The Zacks Consensus Estimate for total sales of $487.25 million for the December-end quarter indicates an increase of 1% from the prior-year quarter.


Incremental input costs will continue to impact margins in fourth-quarter 2018, primarily due to the imposition of the tariffs on steel imports. Further, supply chain challenges continue to be a headwind. The company delivered sixth consecutive quarter of year-over-year improvement in its adjusted EBITDA in third-quarter 2018. We believe this will likely continue in the fourth quarter as well, enabled by Manitowoc’s strategy to cover cost inflation through pricing actions. The company remains focused on cost controls, reducing headcount, increasing productivity and eliminating waste.


The Zacks Consensus Estimate for Manitowoc’s earnings per share is pegged at 5 cents for fourth-quarter 2018, a significant turnaround from the loss of 15 cents per share in the prior-year quarter. 


Share Price Performance



Shares of the company have lost 54% compared with the 14% decline recorded by the industry.


Stocks to Consider


Here are some companies in the Zacks Industrial Products sector that you may want to consider as they have the right combination of elements to post an earnings beat this quarter, according to our model.


HD Supply Holdings, Inc. HDS has an Earnings ESP of +1.50% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.


Terex Corporation TEX has an Earnings ESP of +3.17% and a Zacks Rank #3.


Plug Power, Inc. PLUG has an Earnings ESP of +23.91% and a Zacks Rank #3.


Zacks' Top 10 Stocks for 2019


In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?


Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.


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